The number of distressed homes headed for the real estate market has fallen back to 2008 levels, according to real estate data provider CoreLogic, Santa Ana, California.
“Since peaking at 2.1 million units in January 2010, the shadow inventory has fallen by 28%. The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices,” said Mark Fleming, chief economist for CoreLogic. “This is one of the reasons why some markets that were formerly identified as deeply distressed, like Arizona, California, and Nevada, are now experiencing price increases.”
CoreLogic estimates the size of the shadow inventory by calculating the number of home owners seriously behind on their mortgage payments or in foreclosure and the number of homes lenders have foreclosed upon but not yet listed for sale.
The shadow inventory fell to 1.5 million in April, representing a supply of four months. That’s a 14.8% drop from April 2011, when shadow inventory stood at 1.8 million units, or a six months’ supply, which is approximately the same level as the country was experiencing in October 2008.
Currently, the number of new foreclosed homes for sale is about equal to the number of foreclosed homes being sold each month.
Serious delinquencies, which are the main driver of the shadow inventory, declined the most in Arizona (-37.0%), California (-28.0%), Nevada (-27.4%), Michigan (-23.7%), and Minnesota (-18.1%).